‘Fiscal cliff’ talks hit lull with Boehner’s ‘Plan B’
Just two weeks from an economy- threatening deadline, fiscal cliff talks hit a lull Tuesday as House Speaker John Boehner announced that Republicans would also march ahead with their own tax plan on a separate track from the one he’s been pursuing with President Barack Obama.
The White House and leading congressional Democrats immediately rejected Boehner’s “Plan B,” which would extend soon-to-expire Bush-era tax cuts for everyone making less than $1 million but would not address huge across-the-board spending cuts that are set to strike the Pentagon and domestic programs next year.
“Everyone should understand Boehner’s proposal will not pass the Senate,” said Senate Majority Leader Harry Reid, D-Nev.
Boehner’s surprise move came after significant progress over the past several days in talks with Obama — talks that produced movement on tax-rate increases that have proven deeply unsettling to GOP conservatives and on cuts to Social Security benefits that have incensed liberal Democrats.
Just Monday, Obama offered concessions, including a plan to raise top tax rates on households earning more than $400,000 instead of the $250,000 threshold he’d campaigned on. And the two sides had inched closer on the total amount of tax revenue required to seal the agreement. Obama would settle for $1.2 trillion over the coming decade; Boehner is offering $1 trillion.
By contrast, protecting income below $1 million from an increase in the top tax rate from 35 percent to 39.6 percent would raise only $269 billion over the coming decade.
But the outlines of a possible Obama-Boehner agreement appeared to have shaky support at best from Boehner’s leadership team and outright opposition from key Republicans like vice presidential nominee Paul Ryan, R-Wis., a House GOP aide said.
Though Obama spokesman Jay Carney had nothing good to say about Boehner’s new option, he said, “The president is willing to continue to work with Republicans” toward a broader agreement.
The narrower Plan B faced plenty of opposition. Democrats announced they’d oppose it, and many conservative Republicans continued to resist any vote that might be interpreted as raising taxes. Republicans were refining the measure Tuesday.
Boehner’s back-up plan would extend current income tax rates except for income exceeding $1 million, set a 20 percent tax rate on capital gains and dividend income for income over $1 million instead of 15 percent now, and retain current rules regarding the estate tax instead of tighter parameters sought by Obama.
It would also prevent an expansion of the alternative minimum tax that would otherwise hit 28 million middle- and upper-class Americans with an average $3,700 increase on their 2012 tax returns.